Anthony Chan
Anthony Chan
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With the surprise jump in new home sales and the outsized rise in existing home sales, we now see that widespread talk of the demise of our moderate economic recovery has been somewhat exaggerated.
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Victor didn't have to struggle as hard, so he's not the type who would take a big risk,
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What is giving us protection is all the global competition that we have. That is preventing companies from passing on most of the costs. Even though productivity has been slowing down, it's still fairly significant.
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When you have a long road to travel, you don't take too many breaks. You just keep on going. We're one or two bad numbers away from reassessment of Fed policy, but we're not there yet. Yes, this number is weak, and yes, it's disappointing, but there are some rays of hope in here.
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When you listen to Greenspan's speech, you hear a fear about the sustainability of economic growth and no inflation pressures. Guess what that spells? Lower interest rates and postponing a return to higher rates, to insure the sustainability of growth.
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What the Fed showed was that extraordinary circumstances require an extraordinary strategy. Not only are they moving rates to lows not seen since the early '60s, they're prepared to move them a lot lower.
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The good news is that if so many people are entering the labor force it must mean that they are perceiving an improvement in the economy's prospects, ... The bad news, however, is that if too many people become optimistic about their job prospects, then the unemployment rate will continue to push higher. And the higher unemployment rate does have a damaging impact on consumers. They see it and they think, 'I shouldn't be spending money.' That's one of reason the unemployment rate is so important. It's the one that drives what happens on main street.
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With all that as a backdrop, there are some real positive forces to stimulate growth.
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While an economy is limping during the earliest or first stage of an expansion -- this is where we are -- the ability to pass on the effects of higher input prices like energy is quite limited. But as soon as the economy begins to gain traction, more of these prices can be passed on.
employment report written
Today's employment report also has sustainability written all over it.
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Today's Fed rate cut and directive clearly reflects the fact that the Fed is coming to the end of its rainbow and therefore wants to ensure that it still can convince financial markets that it still has further flexibility to do more if it needs to.
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Yes, the economy was slow and would have come within a hair's distance of a recession. But Sept. 11 was the fatal blow to the economy this year. That probably will be the most important market and economic event of the year.
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There doesn't seem to be any real urgency for firms to start hiring, precisely at a time we're seeing a reemergence of people becoming interested in looking for a job, ... Put the two together, and you have a formula for higher unemployment.
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The prospects of 4 percent real GDP growth (or possibly more after future data revisions) during the third quarter are back on the table,